Car title loans are secured short-term loans designed as a quick and easy way to get ahold of some extra cash. They are not available in all US states due to restrictive regulations. Therefore, before you even consider such a loan as an option, you first need to make sure that car title loans are legal in your state of residence. By getting familiar with the regulations enforced by your state, you minimize the risk of falling victim to the scams that abound in the lending business.
Based on the laws and regulations on car title loans, all US states can be divided into three categories: states that permit car title loans, states that restrict or prohibit such loans, and states where lenders operate by taking advantage of loopholes in the law.
At the moment, only 16 US states permit car title loans at triple-digit Annual Percentage Rates (APRs). In 6 states, lenders find ways to circumvent the limitations prescribed by state law and thus operate in the gray area between legitimate business and fraud. Therefore, in these 6 states, extra caution is advised in approaching the offers of car title loan companies.
In the remaining states, car title loans are not permitted by statute or consumer credit law or they are restricted by low rates that normally result in the absence of car title lenders operating in the state.
What follows is an overview of the laws and regulations on car title loans in all 50 US states.
US States
Alabama
In the state of Alabama, car title loans are permitted, although with several limitations. The maximum loan duration is one month. The maximum interest charge is 25% per month and the maximum APR is 300%. There is no upper limit on the loan amount. As for repossession, the right to cure is 30 days. Lenders may not sell or charge for insurance.
Alaska
Car title loans are restricted/prohibited in this state.
Arkansas
Car title loans are restricted/prohibited in this state.
Arizona
Car title loans are permitted in the state of Arizona in accordance with the Motor Vehicle Time Sales Disclosure Act. The upper limit for interest charges per month is 17% for loan amounts of $500 or less, 15% for amounts between $501 and $2,500, 13% for amounts between $2,501 and $5,000, and 10% for loan amounts greater than $5,000. The maximum APR is 204%. There are no maximum limits on the loan amount and duration.
California
California is one of the states where lenders operate within the gray area. Namely, by offering large loan amounts, lenders manage to avoid the rate caps set for small loans. We advise you to get thoroughly acquainted with the rates and terms associated with taking out a car title loan with the company of your choice before signing a contract.
Colorado
Car title loans are restricted/prohibited in this state.
Connecticut
Car title loans are restricted/prohibited in this state.
Delaware
In the state of Delaware, car title loans are permitted, with no caps on interest charges, the loan amount, and the APR. The maximum loan term is 180 days, rollovers included. Lenders are not allowed to pursue criminal action against borrowers and must operate in accordance with the Fair Debt Collection Practices Act. For customer protection, advertisements featuring teaser rates are strictly prohibited.
Florida
Much like California, Florida is a state where car title lenders manipulate the law to their advantage. They provide services in accordance with the consumer finance law and impose additional charges including but not limited to credit insurance fees. Please, make sure you fully understand the terms you agree to before taking out a car title loan in Florida.
Georgia
In accordance with the Pawnbroker Law, car title lenders are allowed to offer loans at triple-digit APRs within the state of Georgia. Interest charges are limited to 25% per month during the first three months and 12.5% per month after the first 90 days of the loan term. In addition to the interest, lenders may also charge lien fees. The maximum APR is 300%. The loan term limit is set at 30 days but may be extended.
Hawaii
Car title loans are restricted/prohibited in this state.
Idaho
In Idaho, car title loans are permitted by law, with no limitations on the interest charges and APR. The maximum loan amount is equal to the retail value of the vehicle. The maximum loan term is 30 days, with the possibility of renewal. The right to cure is available, with a 10-day notice.
Illinois
Car title loans are permitted in the state of Illinois and may be offered by licensed lenders only. There are no caps on interest charges and APRs. The maximum loan amount is $4,000 or no more than 50% of the borrower’s monthly income. Loans must be repaid in equal installments due to the prohibition of balloon payments. New car title loans cannot be approved sooner than 15 days after the borrower has paid off the previous title loan.
Indiana
Car title loans are restricted/prohibited in this state.
Iowa
Car title loans are restricted/prohibited in this state.
Kansas
In the state of Kansas, car title loans are not expressly permitted by law. However, working their way around the legal limitations, lenders operating in this state offer title loans in the form of open-end credit, which is not subject to rate caps. Having in mind the implications of such a mode of operation and the lenders’ casual approach to the law, it is imperative that you have a complete understanding of the loan terms and your rights as a borrower prior to entering into a contract with a Kansas-based title loan company.
Kentucky
Car title loans are restricted/prohibited in this state.
Louisiana
Louisiana is a US state with restrictive regulations on car title loans. However, this has not prevented car title lenders from operating within this state. Louisiana-based car title loan providers offer loan amounts greater than $350, with loan terms longer than two months, thus bypassing the legal restrictions. We strongly recommend that you pay close attention to the content of your loan agreement and take into consideration all potential consequences before you take out a car title loan in this state.
Maine
Car title loans are restricted/prohibited in this state.
Maryland
Car title loans are restricted/prohibited in this state.
Massachusetts
Car title loans are restricted/prohibited in this state.
Michigan
Car title loans are restricted/prohibited in this state.
Minnesota
Car title loans are restricted/prohibited in this state.
Mississippi
In accordance with the Title Pledge Act, car title loans are permitted in Mississippi. Loan costs are limited to 25% interest per month, plus a sales fee. The maximum APR is 300%. The loan amount may not exceed $2,500 and the maximum loan term is 30 days. Car title loans may be renewed, in which case the borrower agrees to pay 10% in addition to the interest. Lenders are not allowed to sell insurance or offer borrowers to repay an existing loan with another title loan.
Missouri
In the state of Missouri, car title loans are permitted and regulated by the Title Loans Law. There are no caps on interest charges and APRs. Lenders may charge a $25 NSF fee, as well as origination fees. The maximum loan amount is $5,000. Loan term may not be shorter than 30 days.
Montana
Car title loans are restricted/prohibited in this state.
Nebraska
Car title loans are restricted/prohibited in this state.
Nevada
Nevada regulations allow lenders to offer car title loans and do not impose any caps on interest charges and APRs. The maximum loan amount is equal to the fair market value of the vehicle. Lenders may not charge any additional fees apart from an NSF fee. The loan term limit is set at 30 days. However, loans may be renewed up to 6 times, with the maximum total duration including the renewals amounting to 210 days.
New Hampshire
In New Hampshire, car title loans are permitted and may amount to as much as $10,000 per loan. The upper limit for interest charges is 25%. Lenders may also charge a lien fee, an NSF fee, and a late fee no greater than 5% of the installment. The maximum APR is 300%. The loan term limit is one month. However, it is possible to renew a loan up to 10 times, in which case the borrower must agree to pay down 10% of the loan.
New Jersey
Car title loans are restricted/prohibited in this state.
New Mexico
Car title loans are permitted in the state of New Mexico in accordance with the New Mexico Small Loan Act. There are no caps on interest charges and the APR. Lenders are allowed to charge a late fee after 10 days and the fee may not amount to more than 5% of the loan. The maximum loan amount is $2,500 and the entire loan must be paid off in a single installment.
New York
Car title loans are restricted/prohibited in this state.
North Carolina
Car title loans are restricted/prohibited in this state.
North Dakota
Car title loans are restricted/prohibited in this state.
Ohio
Although car title loans are not expressly permitted in Ohio, car title lenders operating in this state have found a convenient loophole in the law. They provide title loans under credit service organization or mortgage loan laws. This is great news for numerous Ohio residents in search of a fast and simple way to overcome financial troubles. However, it is necessary to be particularly cautious when taking out a car title loan in this state. Get well acquainted with all the aspects of your loan agreement before signing, so you can avoid any unpleasant surprises down the road.
Oklahoma
Car title loans are restricted/prohibited in this state.
Oregon
Car title loans are restricted/prohibited in this state.
Pennsylvania
Car title loans are restricted/prohibited in this state.
Rhode Island
Car title loans are restricted/prohibited in this state.
South Carolina
Much like in California, car title lenders in South Carolina have opted for a creative approach to state regulations, which allows them to operate in this state in spite of legal restrictions. They offer large loan amounts, thus avoiding small loan rate caps. If you are thinking about taking out a car title loan in South Carolina, make sure you carefully read through the loan agreement before signing.
South Dakota
Car title loans are restricted/prohibited in this state.
Tennessee
In Tennessee, car title loans are permitted by law and the maximum loan amount is $2,500. The interest charges may not be greater than one fifth of the loan plus 2% per month. The maximum APR is 264%. The upper limit for loan term is 30 days, but loans may be automatically renewed. If the loan is renewed for the third time, the borrower is required to pay 5% of the principal of the original loan, along with the interest and fees. The right to cure is limited to 20 days.
Texas
Car title loans are permitted by law in the state of Texas. There is no cap on the loan amount and no limits are set for CAB fee or any other fees. Interest charges are limited to 10%. The maximum term for credit services is 180 days. Both single-payment and installment loans are permitted.
Utah
In Utah, car title lenders are allowed to offer loans no greater than the fair market value of the vehicle. There are no caps on interest charges and the APR. Borrowers may get one loan at a time and no more than one loan per vehicle. Lenders must not offer loans to borrowers who cannot repay the loans they apply for. Car title loans may be renewed.
Vermont
Car title loans are restricted/prohibited in this state.
Virginia
According to Virginia state regulations, car title lenders operating in this state may offer car title loans that are not greater than 50% of the fair market value of the vehicle. The maximum APR is 264%. The upper limit for interest charges per month is 22% of the outstanding balance for amounts up to $700, 18% of the outstanding balance for amounts between $701 and $1,400, and 15% of the outstanding balance for amounts greater than $1,400. Lenders may also charge a lien fee and a late fee. The late fee may not exceed 5% of the payment and can be charged 7 days after the payment was due. Loans must be repaid in equal monthly installments. The minimum loan term is 120 days and the maximum loan term is 12 months. No rollovers or renewals are allowed.
Washington
Car title loans are restricted/prohibited in this state.
West Virginia
Car title loans are restricted/prohibited in this state.
Wisconsin
In Wisconsin, car title loans are permitted by law and may amount to no more than 50% of the value of the vehicle. It is important to note that a single car title loan may in no case exceed $25,000. There are no caps on interest charges and the APR. The maximum loan term is 6 months. Lenders are by no means allowed to require car keys as security.
Wyoming
Car title loans are restricted/prohibited in this state.